PROPERTY GUIDELINE VALUE AND ITS IMPORTANCE
Property Guideline value is the estimated market value of the property as per the records maintained by the Government. Under ideal conditions, the property guideline value should reflect the true market value of the property. However, in most the cases, the property guideline value is lower than the market value of the property; but can also be higher than the market value in exceptional cases.
The State government is authorized to fix the Property Guideline value for all the areas in the State. Properties that are well established have street-based guideline values. For a residential area that is not formed into streets, the guideline value of such properties is fixed upon the survey number of the property.
Property Guideline Value Importance
The Property Guideline value plays a key role in the decision of purchasing a particular property and its registration. This value provides assistance to the registration officer to detect the undervaluation of property. However, where the property guideline value is unnecessarily higher than the market value, such cases can be brought to the notice of the relevant Deputy Inspector General of Registration, Inspector General of Registrations, and District Registrar for correction of the abnormality.
The registration charges and the stamp duty of a property is typically based upon Property Guideline Value. The Property Guideline Values are periodically revised to have them in sync with the Market Value.
If guideline values and the market values of properties are different then:
- One is the encouragement of transferring black money in the real estate industry
When a property guideline value is lower than its market value, it tends to a number of property deals where only the property guideline value is mentioned in the sale document and balances are made in cash. Generally, the market value of a property is higher than its guideline value, and the difference between market value and guideline value often ends up becoming the ‘cash component’ in the deal, which is considered as a source of black money generation. and
- The second is a loss of revenue to the State government –
As stated above as well, charges to register the property and the stamp duty of a property are calculated based on the Property Guideline Value. If the property guideline value is lesser than the market value and the same is considered, there will be a loss of revenue to the respective state governments.
